The two key meetings to keep your eye on this week will involve vaccines and stimulus. On Thursday, the FDA will meet to approve emergency-use of Pfizer's COVID vaccine, with inoculations to begin as early as Friday. It has been reported by FDA officials that as many as 20 million people could be inoculated by the end of this year. The second meeting to keep your eye on this week is in Congress, as the December 11th deadline for the Federal Budget will expire. A compromise is likely, otherwise we'll be in for a government shutdown. Expectations are that a new fiscal stimulus package will be somehow attached to a Federal Budget deal. Approximately 13 million people will lose unemployment benefits on December 26th without action from Congress. If the Federal Budget is passed without a stimulus package, expect the markets to be disappointed. Meanwhile, the economic releases were positive overall last week. While the Jobs Report revealed fewer new jobs than expected, the Unemployment Rate dropped from 6.9% to 6.7%. Jobless Claims dropped more than expected and claims have declined a total of 90% since the peak in claims in March. The National Financial Conditions Index continues to point to a well-functioning economy at this point. This week is a little lighter on the economic releases, but we do get Consumer Prices and Producer Prices (inflation). Inflation is one of the keys to keeping the Fed Funds Rate low. The other is employment. Our view is that the Fed is going to have a tough time managing inflation next year, while unemployment remains on the high side (at least for the first half of 2021). Further lockdowns and/or COVID restrictions could make the economic numbers soft for the next few weeks as the delivery of the vaccine takes hold.
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